What is Estate Planning?
Estate planning is a lifelong process by which a person makes legal arrangements to most efficiently and effectively manage and transfer property both during life and after death according to your goals. Estate planning also involves the minimization of taxes, providing for personal care and property management during periods of incapacity and providing for the custodial care of any minor or adult dependent children.
What Happens if I die without an Estate Plan?
Everybody has an estate plan — it is either created by you or it is created for you by the Illinois General Assembly legislature. Dying without a Will or Estate Plan is known as dying “intestate.” You need to create your own estate plan if you care about how your property is handled and disposed of after your death, or during periods of incapacity.
What is Probate?
Probate is a division of the court system that handles the estates of every person who is either unable to handle their affairs because of a physical or mental disability, or who has died. Ideally, it is designed to protect your assets during your lifetime and to supervise the proper administration and distribution of your estate at your death. Probate is costly, it takes a long time, and because of the number of cases in the system, it is inefficient and burdens families. Certainly, the Probate system was not designed to handle the estates of every person. If you die with assets in your name, and the total collective value of your assets exceeds $100,000, your entire estate is subject to the Probate process. Probate requires a minimum six-month claims period. The entire process can take an average of 18 months or more to complete.
How can Probate be Avoided?
With a properly drafted, signed, and funded Living Trust. All assets in your name are retitled to the name of your Living Trust and are not subject to probate and are administered privately and efficiently by your Successor Trustee, often one of your family members or trusted friend, who can also be a beneficiary of the Living Trust. Importantly, the process could take only a matter of weeks, or as long as it takes to transfer your assets to your beneficiaries.
What is a Living Trust?
A Living Trust is also known as an “Intervivos Trust” or “Revocable Trust.” A Living Trust is an estate plan that manages your assets during your lifetime and efficiently passes your estate to your chosen beneficiaries after your death.
Is a Living Trust Expensive? What documents are included?
No. Today, with the advantage of technology and a competent attorney, a Living Trust estate plan, complete with Power of Attorney documents and a Will, can be secured for a fee comparable to what you would pay for a basic estate plan. Moreover, you would avoid the thousands of dollars of Probate cost and the burden on your family.
A complete Living Trust estate plan with our firms includes: a Trust, a Last Will and Testament (often referred to as a Pour-Over Will, that acts as a safety net for any assets not titled in your name at your death), a Financial Power of Attorney, and a Health Care Power of Attorney, Living Will, and a HIPPA Authorization form.
What Kind of Assets Should be Titled to my Trust?
The following most valuable property items should be included:
houses and other real estate (even if they're mortgaged)
stock, bond, and other security accounts held by brokerages (but think about naming a TOD beneficiary instead)
small business interests (stock in a closely held corporation, partnership interests, or limited liability company shares)
patents and copyrights
valuable works of art, furniture or antiques, and
valuable collections of stamps, coins, or other objects.
You can add property to your living trust at any time. And because you'll also be the trustee, you can always sell or give away property in the trust, or take it out of the living trust and put it back in your name as an individual.
What are other advantages of a Living Trust?
Some of the many advantages of a Living Trust estate plan:
Protect you in the event of your disability
Organize lifetime management of your assets
Contains specific instructions for inheritance
Protects the wishes of the first spouse to die
Avoids the perils of joint tenancy
Protects against loss of benefits or government reimbursement in the event a beneficiary acquires a disability before your death.
Includes assets in all states and avoids multiple state probate
Contains a no-contest clause
Provides creditor protection for beneficiaries
Is easily amended
Can readily be adapted to the laws of another state in the event you move
What is the difference between a Will and Trust based estate plan?
Effective upon death ONLY
Takes up to 1-2 years to administer
More costly for family members to administer
Does not manage assets while minors are under 18
Less expensive to draft/complete
Assets frozen upon death
Easy for someone to contest
Effective upon incapacity AND death
Takes 1-3 weeks to administer
More expensive to draft/complete
Faster and less costly for family members to administer
Manages assets while minors are under 18 and beyond
No frozen assets upon death